[NEW YORK] A federal appeals court on Tuesday revived a class-action lawsuit accusing Pfizer Inc of causing tens of billions of dollars of losses for shareholders by misleading them about the safety of its Celebrex and Bextra pain-relieving drugs.
By a 3-0 vote, the 2nd US Circuit Court of Appeals in Manhattan said US district judge Laura Taylor Swain erred in dismissing the case after preventing Daniel Fischel, a former University of Chicago Law School dean, from testifying for the shareholders about potential damages.
It also said Ms Swain was wrong to conclude that jurors could not find Pfizer liable for statements by GD Searle & Co and Pharmacia Corp, which previously made Celebrex and Bextra, that allegedly concealed the drugs' cardiovascular risks.
The lawsuit began in 2004, and covers investors who bought Pfizer stock between Oct 31, 2000 and Oct 19, 2005.
Pfizer's market value fell by roughly US$70 billion from early Oct 2004 until the day after the class period ended. Tuesday's decision returns the case to Ms Swain.
In a statement, Pfizer said it "appropriately communicated accurate and science-based information about its medicines to investors and the public at all times and will continue to defend this case vigorously".
Concerns about the safety of Celebrex and Bextra mounted in late 2004 when rival Merck & Co withdrew its own Vioxx drug because of associated cardiovascular risks.
Pfizer pulled Bextra from the US market the following April, and agreed in Sept 2009 to pay US$2.3 billion to settle a US Department of Justice probe into the marketing of Bextra and other drugs.
Shareholders accused the New York-based company of having concealed tests that began in 1998 and suggested health risks associated with Celebrex and Bextra.
Writing for the appeals court, circuit judge Debra Ann Livingston said Ms Swain "went astray" in excluding Mr Fischel's expert testimony because of his failure to "disaggregate" alleged misrepresentations by Pfizer that may have inflated its stock price from any misrepresentations by Searle and Pharmacia.
"Plaintiffs' theory is directly contrary to this idea: they argue that Pfizer is liable for all of the artificial inflation related to Celebrex and Bextra because, through its own fraudulent conduct, Pfizer concealed the same information as its predecessors," Ms Livingston wrote.
In that context, she added, "Fischel's testimony can be helpful to the jury."
A lawyer for the plaintiffs had no immediate comment.
In afternoon trading, Pfizer shares rose 8 US cents to US$31.97.
The case is In re: Pfizer Inc Securities Litigation, 2nd US Circuit Court of Appeals, No 14-2853.